2023 Midyear Outlook: Is the Economy Half Empty or Half Full?

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Heading into 2023, a looming recession dominated the headlines. Moody’s Chief Economist Mark Zandi quipped at the time, “CEOs are falling over themselves to say we’re falling into a recession. . . . Every person on TV says recession. Every economist says recession. I’ve never seen anything like it.” Fast-forward to today at the midyear point of 2023, and the data is telling a different story.

Inflation has fallen by 2.5 percent, more than 1.8 million jobs have been created in the past six months, and the S&P 500 has had one of its best starts in 25 years. Many investors are now asking, what happened to that recession? Let’s take a look back at how we got here—and what we can expect for the rest of the year.

Strong Start to 2023

Although many economists were firmly in the recession camp at the close of 2022, Commonwealth’s Investment Management team foresaw a Goldilocks economy (i.e., an ideal state with full employment, economic stability, and stable growth) and believed there were tailwinds for growth.

Indeed, we did see a very strong first half. And there’s reason to believe that the tailwinds will continue to blow through year-end, specifically those related to inflation, employment, and the consumer.

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